| | Plan for Emerging Possibilities in Farm Business Management | Entrepreneurial Thinking in Farm Business Management | Asking the Right Question
Plan for Emerging Possibilities in Farm Business Management
Judge a man by his questions rather than his answers. 1
Business planning is about making choices to determine a path for going forward. These include how the business will position itself both in the industry and the market. As well, choosing which action best allows the business to progress toward goals and objectives.
In turbulent business environments, decision makers are not able to think through all possible outcomes to make choices with certainty. Deliberate planning focused on most likely scenarios and guided by check lists will not prepare a farm business for the uncertainty of a business environment with many moving parts. Similarly, planning based on reacting to problems and opportunities as they emerge can prevent decision makers from addressing the right issue at the right time in the right manner. A decision to finance a major capital purchase in order to gain operating efficiencies in a period of strong market prices may not be beneficial when the most significant issue for the business is an existing vulnerability to declining cash flows.
When facing uncertainty business planning can best be served by balancing the deliberate pursuit of likely outcomes and the flexibility needed to realize unexpected possibilities. The “Plan for Emerging Possibilities in Farm Business Management” series of documents will assist modern farm managers consider new perspectives and new possibilities in the context of business planning and decision making. Thinking ahead with different perspectives and different guiding questions can ensure planning and decision making processes address the right issue at the right time in the right manner.
Entrepreneurial Thinking in Farm Business Management
Entrepreneurs ‘make money’ – meaning they create value that did not previously exist.2
Entrepreneurial Thinking
A turbulent business environment can create as well as eliminate opportunities for a farm business. Entrepreneurial thinking employs the perspective that a dynamic and changing business environment is creating emerging opportunities for new processes, products or services. Rather than reacting to change, entrepreneurial thinking looks ahead to consider new ways to solve problems and create value as well as how to move these ideas to action.
The entrepreneurial perspective focuses on alternative possibilities for creating value with the available resources and capabilities. This is different from planning processes focusing on alternative ways resources can be organized to achieve fixed goals and objectives. Entrepreneurs think ahead to consider emerging opportunities for providing the right product, in the right form, in the right place at the right time.
Alberta farm businesses have developed their business strategies by thinking ahead to recognize numerous possibilities to create value by solving customer problems and un-met needs.
- Raising and marketing meat goats captured the business opportunity that emerged from changing demographics and solving the problem of providing a reliable supply to a growing market segment with a preference for goat meat. Farm resources and production skills were adapted to produce and develop markets for specialized livestock that meet the requirements of the specific market segment.
- Custom spraying businesses have been established to solve the unmet need of crop producers who for various reasons were unable to access technology advances in precision crop protection. Technical and production skills as well as networking skills were leveraged to develop custom farming businesses to meet this need.
- Farms businesses developed separate trucking businesses to meet the emerging needs of individuals who do not have the equipment to efficiently haul their own crops and forages. These businesses leveraged skills and experience in hauling their own crops along with a network of contacts to meet this need.
- Farm businesses developed separate oilfield service businesses to meet the emerging need for reliable local service providers. Operating skills, work ethic and relationship building skills were leveraged to provide value to this emerging need.
- Farm businesses implemented strategies of marketing packaged beef to directly end users. They leveraged production skills, location and relationship skills to meet consumer needs for reliable supplies of locally produced products.
- Leveraging skills to innovate and adapt new technologies to their farm business have allowed individuals to realize business opportunities based on assisting other producers adapting the technology. Individuals skilled in capturing the benefits from new technologies such as GPS have developed service businesses to assist clients in adopting the technology for their businesses.
- Leveraging marketing knowledge and skills have developed businesses to assist clients in gaining the benefits of this knowledge. Individuals with strong marketing skills including how to use available marketing tools to capture price and delivery opportunities have realized business opportunities to provide grain marketing advisory services to other farmers.
Entrepreneurial thinking strengthens planning and decision making by considering more possibilities and more alternatives for the farm business to provide value with available resources. Persistently looking for opportunities can lead to new ideas, new offerings, new business ventures or new strategies. Decisions will focus on which opportunities strengthen the farm business and what is required for this to occur.
The relationship between the main farming enterprise and the new business opportunity could be complementary or one in which they compete for resources. There could be trade-offs in which pursuing a new business venture drains resources, time and energy from the existing farm business or main farming enterprise. The management challenge is to balance the performance of the main farming enterprise with that of a new business venture so that together (the whole farm business) they have the greatest capacity to adapt to the changing business environment, meet goals, and prosper.
Factors that enable entrepreneurial thinking in identifying more possibilities for the farm business to adapt to the changing business environment, meet goals, and prosper include:
- Entrepreneurial thinking is oriented to continuously identifying and solving emerging problems that can lead to creating new value. Rather than limit thinking to capturing a share of an existing market they leverage knowledge of customer needs to consider how to create new value then how to capture a share of this new opportunity.
- Entrepreneurial thinking seeks to understand customer needs in a changing market, test new ideas for providing value to customers and determine steps for implementing these ideas.
- Entrepreneurial thinking is oriented to continuously identifying individuals who might be potential resources in solving problems and achieving a competitive edge.
- Entrepreneurial thinking guides an idea through to action using available resources and capabilities while avoiding paralysis due to overanalyzing and over planning.
- Entrepreneurial thinking is curious, inquisitive and highly flexible. Entrepreneurs develop a portfolio of potential opportunities then continuously scan their business environment for new trends that may elevate a potential opportunity to an emerging opportunity.
- Entrepreneurial thinking recognizes that risk is unavoidable but they can be managed. Rather than avoid risk, entrepreneurs take steps to be good at managing risk so they can successfully invest in riskier (and more profitable) projects.
Asking the Right Questions
An entrepreneurial perspective continuously scans the business environment to identify emerging opportunities to create value by providing the right product, in the right form, in the right place at the right time. Asking the right questions can guide entrepreneurial thinking to new possibilities for using available resources and capabilities to create value.
1. What are the core capabilities (resources, knowledge, skills and processes) that are available to solve problems and create value for a market segment?
2. What are the major forces creating change in the business environment?
3. How might these forces unfold to create emerging business opportunities?
4. What problems exist in the business environment that might be potential opportunities for creating value?
5. Are there individuals who might be potential resources in solving problems and achieving competitive advantage?
6. Are there opportunities where being good at managing risk allows for pursuing a strategy with greater risk?
Developed by Dennis Dey and Joel Bokenfohr
1 Cadsby,T.(2014). Closing the Mind Gap; BPS Books. Original Source: Voltaire.(1994). Letters Concerning the English Nation; Oxford University Press.
2 Baskerville, P., Flanagan, N.; Characteristics of an Entrepreneur, www.startupeducation.wordpress.com |
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